Major banks pledging net zero are pouring money into the dirtiest fossil fuel

Shanghai Financial institutions channeled more than $1.5 trillion into the coal industry in loans and underwriting from January 2019 to November 2021, even though many have made net-zero pledges, a report by a group of 28 non-government organizations showed.

Reducing coal use is a key part of global efforts to slash climate-warming greenhouse gases and bring emissions down to "net zero" by the middle of the century, and governments, firms and financial institutions across the world have pledged to take action.

But banks continue to fund 1,032 firms involved in the mining, trading, transportation and utilization of coal, the research showed.

"Banks like to argue that they want to help their coal clients transition, but the reality is that almost none of these companies are transitioning," said Katrin Ganswind, head of financial research at German environmental group Urgewald, which led the research. "And they have little incentive to do so as long as bankers continue writing them blank checks."

The study said banks from six countries - China, the United States, Japan, India, Britain and Canada - were responsible for 86% of global coal financing over the period.

Direct loans amounted to $373 billion, with Japanese banks Mizuho Financial, Mitsubishi UFJ Financial -- both members of the Net Zero Banking Alliance -- identified as the two biggest lenders. Neither firm responded immediately to requests for comment.

Another $1.2 trillion was channeled to coal firms via underwriting. All of the top 10 underwriters were Chinese, with the Industrial and Commercial Bank of China (ICBC) in first place, accounting for $57 billion. It did not respond to a request for comment.

Institutional investments in coal firms over the period amounted to $469 billion, with BlackRock at the top of the list with $34 billion. The US asset manager declined to comment on Tuesday, but chief executive Larry Fink wrote in January that "divesting from entire sectors... will not get the world to net zero."

"Foresighted companies across a wide range of carbon intensive sectors are transforming their businesses, and their actions are a critical part of decarbonization," he wrote in a letter to fellow chief executives.

Comparative coal funding figures for previous years were not immediately available. Other research studies, however, have shown that coal investment is on the decline.

The coal sector is responsible for nearly half of global greenhouse gas emissions. More than 40 countries pledged to end coal use following climate talks in Glasgow in November, though major consumers such as China, India and the United States did not sign up. Read full story

But more China-invested overseas coal-fired power capacity was cancelled than commissioned since 2017, according to research from the Centre for Research on Energy and Clean Air (CREA) last June. Read full story

Furthermore, nearly all internationally available development financing is now committed to reducing or ending investment in coal-fired power after moves by China and the G20 to stop supporting new projects overseas, research from Boston University's Global Development Policy Center showed in November.